INTECSEA Consulting

So, You Think Youre Good

At Making Decisions??

INTECSEA

An Investment Opportunity
Investment of 10 with uncertain return
Investment is sunk cost (will not be returned)
To simulate uncertainty, we use four playing cards two red and two
black.
- Two black cards win 30
- One black and one red win 15

- Two red cards attract an additional penalty of 6 i.e. total loss of 16

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A Decision Tree Makes The Problem Clearer

Two Black

Invest

One Red / One Black

-10

Two Red

Do Not Invest

30

15

-6

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The Expected Value

Two Black
EV = 30.(1/6)
+15.(2/3) 6.(1/6)

Invest
-10

1/6

14

One Red / One Black

2/3

30

15

4
Two Red
1/6

Do Not Invest

-6

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Value of Information
Two Black

Invest

One Red / One Black

-10

Info

Two Red

-3

Do Not Invest

30

15

-6

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The First Card is Red

Two Black
EV = 30.(0)
+15.(2/3) 6.(1/3)

Invest
-10

8.00

One Red / One Black

2/3

30

15

-2.00
Info

Two Red

-3

1/3

Do Not Invest

-6

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The First Card is Black

Two Black
EV = 30.(1/3)
+15.(2/3) 6.(0)

Invest
-10

1/3

20.00

One Red / One Black

2/3

30

15

10.00
Info

Two Red

-3

Do Not Invest

-6

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The Monty Hall Problem

A

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The Monty Hall Problem

Stick with
original
choice

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The Monty Hall Problem

A

Switch from
original
choice

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Decision Quality
DQ represents the periodic application of structured decision making to
specific opportunities and decision problems.
Organisational Decision Quality (ODQ) is the understanding and use of
DQ by the full, corporate-wide decision making community, in
collaborative value creation.

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Elements of Decision Quality

Appropriate
Frame

Commitment
to Action

Clear Values
and Trade- off

Logically
Correct
Reasoning

Creative
Alternatives

Meaningful
Reliable
Information

A Decision Is Only As Good As Its Weakest Link

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Defining the Decision Frame

Policy

Strategic

Tactical

Constraints and boundaries

within which the decision
must be made

Primary decisions to
be made

Secondary
decisions

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Decision Framing Workshop

Business
Framing
Decision
Frame

Values and
Trade-offs

Decision
Criteria

Business
Drivers

Business
Opportunity

Concept
Identification

Concepts to
be
Considered

Creative
Alternatives

Strategic
Questions

Information
Reasoning
Action

Strategy Map
All Options

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Prospect Development Study

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INTECSEA

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Strategy Map

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Strategy Map

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Summing Up
An organisations value is just the sum of the decisions it makes and
executes
Humans are not naturally wired to consistently make good decisions

Decision Quality methods provide a structured framework within which

complex decision making can be transparent and auditable
Decision Quality is a learned skill

Take a look at .
SPE Technical Report Guidance for Decision Quality for Multicompany Upstream Projects

Society of Decision Professionals website

www.decisionprofessionals.com

INTECSEA

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